Kuwait announces fine for business concealment

Kuwait has rolled out a law aimed at combating commercial concealment and unlicensed business activity, as part of efforts to enhance market transparency and curb illegal business practices.

Kuwait issued Decree-Law No. 78 of 2026, which establishes a legal framework to regulate economic activity, promote fair competition and curb illegal business practices.

The 14-article decree law prohibits individuals and companies from carrying out economic activities without the required licenses or beyond the scope of their authorized permits. It also criminalizes commercial concealment, where a person allows another to conduct business using their license, commercial registration or trade name in violation of the law.

According to the explanatory memorandum, the legislation comes in response to the increasing practice of individuals engaging in economic activities without proper authorization, a situation that has disrupted market stability and undermined the principles of a fair business environment

Those found guilty face prison terms of between one and three years and fines ranging from 10,000 Kuwaiti dinars (KD) to KD 100,000 dinars, or an amount equal to the profits made through the offence, whichever is higher.

Courts may also impose either imprisonment or fines, with penalties increasing depending on the number of offenders or violations.

It also provides for penalties of up to six months’ imprisonment and fines of up to KD 10,000 for obstructing enforcement officials or violating provisions related to inspections and investigations.

The law also holds company managers accountable for offences committed under their supervision if they were aware of the violations or failed to prevent them. Companies can also be held jointly liable for offences committed in their name or for their benefit.

Courts are required to confiscate proceeds and assets derived from commercial concealment offenses, in addition to closing violating establishments, revoking licenses and deporting foreign offenders while safeguarding the rights of bona fide third parties.

Penalties will be doubled for repeat offenders who commit similar offences within five years of a final conviction.

The law also introduces a settlement mechanism allowing first-time offenders to resolve cases before or during court proceedings by paying at least half of the maximum prescribed fine, provided they rectify the violation and regularize their legal status. Repeat offenders are not eligible for the scheme.

The decree-law further establishes a financial reward system for individuals who report commercial concealment offenses, granting informants up to 10 percent of collected fines, subject to the provision of credible evidence leading to a final conviction.

It grants judicial enforcement powers to designated officials responsible for implementing the law and prohibits any obstruction of inspection or regulatory duties, including withholding documents or providing false information.